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Event Book 20122

Event Book of MCC Summer Academy 2012

Edited by: Bianka PergeReviewed by: Melinda Benczi, Dávid Ferke

With the support of:Mathias Corvinus CollegiumInternational Visegrad FundMCC Summer Academy Project Team

Budapest, 2012

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

What is MCC? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Project system in MCC . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

International Visegrad Fund . . . . . . . . . . . . . . . . . . . . . 5

How did our project start? – From the beginning to the end . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

The program of MCC Summer Academy 2012 . . . 6

Professional programs . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Lectures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Péter Kaderják – Global trends in energy policy and market development . . . . . . . . . . . . . . . . . . . . . . . 7

Justyna Przychodzen . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Tibor Faragó – International Climate Policy Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

József Rónaky, Csúvár Miklós – Nuclear energy-safety . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

József Fucskó – Emission Trading . . . . . . . . . . . . . . .10

Erik Galambos – Solar Energy . . . . . . . . . . . . . . . . . . .10

István Pócs – Geothermal Power generation opportunities in the CEE region . . . . . . . . . . . . . . . .11

Learning through practice . . . . . . . . . . . . . . . . . . . . . .11

Visiting Telenor House . . . . . . . . . . . . . . . . . . . . . . . . . .12

UNHCR Simulation Game . . . . . . . . . . . . . . . . . . . . . .13

Case study solving . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Thesis presentations . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Social programs and free time activities . . . . . . . .22

Cultural trip to Budapest . . . . . . . . . . . . . . . . . . . . . . .22

Night Excursion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Gala Dinner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Opinions from our participants . . . . . . . . . . . . . . . . .25

List of contents


http://www.mcc.hu/

http://visegradfund.org/

http://www.mcc.hu/


MCC Summer Academy 3

Dear Reader,

It is a great pleasure to introduce you the MCC Energy Summer Academy 2012 project and its eventbook . The present eventbook is the result of the persistent, one year long work of first and second year university students of Mathias Corvinus Collegium.

By organizing the MCC Energy Summer Academy 2012 we had several aims. Firstly, we wanted to contribute to the development of our college’s public relations and further widening the palette of partner-ships. Secondly, we wanted to attract talented, open minded and enthusiastic people from all over Europe to work, think and have fun together. Last but not least we focused on hard skills during the selection process of the topics, lecturers and trips, down to we wanted to build up a solid background of knowledge concerning energetics to initiate deep discussions on its questions in the 21th century.

After having successfully organized the first summer academy of MCC in the August of 2012, I can proudly report that we have reached our aims. The first step of establishing a new educational area for MCC was successful and the organizers are on the right way to take the second step in 2013.

In this book you can get a deeper insight into our or-ganizational process and the detailed actions of MCC Energy Summer Academy 2012. I hope you will find it as interesting as the organizers and it will successfully spark your interest in the direction of our work.

Thank you for your kind attention,

Ferenc Nyakas Project Leader

MCC Energy Summer Academy 2012

Project Leader: Ferenc Nyakas

Organizers:Bence DamjanovicsBalázs HajduVeronika LázárTamás NagyBianka PergeÁdám SzabóRoland Szebényi

Helpers:Kata PfisztererAndrás PleszelBalázs Bognár

Introduction


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What is MCC?

Mathias Corvinus Collegium is an interdisciplinary institution that offers further education and self-training opportunities for the students coming from different universities . The students of our institution are those who possess outstanding talent, and who, forming a dynamically developing team, are working on realizing important and valuable goals . In our community, which consists of more than 500 members, you can find students from almost all the ethnic groups and layers of the Carpathian Basin . This private institution was founded by András Tombor and Balázs Tombor more than fifteen years ago . Since it was founded, the MCC has become Hungary’s best interdisciplinary educational institution, which is also acknowledged in Europe .

Project system in MCC

The main aim of our College is to build up a com-munity of future leaders, who are willing to share their knowledge and expertise and are ready to work together .

We believe that this can be only achieved through a successful project system . The Mathias Corvinus Collegium initiates different projects each year, which bring together students to cooperate, learn practical things and achieve their goals . Within the framework of mass university education there is no opportunity for customized teaching, therefore this interdisciplinary education with small project groups can fill a gap . Both the work done togeth-er and the professional programs give an insight into the unique way of thinking and methods of professionals working in different fields of study .

The project system has been in progress for three years . It has realized numerous success stories such as: Bonus Intra history competition and the 3H Project . MCC Energy Summer Academy 2012 is one of our biggest projects .

The organizational structure of the Collegium is diversified . Our Secondary School Program focuses on talented students from high schools; the Junior Program targets first-year students; the Faculty Program for the sophomores and third year students and the Leadership Program is dedicated to the seniors and undergraduates .

Among the teachers there are almost thirty inter-nationally recognized foreign professors, which is an unparalleled number in our country . The MCC forms a community that can influence and shape both its immediate environment and the future of the country in a progressive and responsible way .


http://www.mcc.hu/


International Visegrad Fund

Our program could come true with the help of the grant of the International Visegrad Fund .

The International Visegrad Fund is an international organization based in Bratislava founded by the gov-ernments of the Visegrad Group (V4) countries:the Czech Republic, the Republic of Hungary, the Repub-lic of Poland, and the Slovak Republicin Štiřín, Czech Republic, on June 9, 2000 .

The purpose of the Fund is to facilitate and promote the development of closer cooperation among V4 countries (and of V4 countries with other countries, especially but not exclusively non-EU member states in Eastern Europe, the Western Balkans and the South Caucasus) through grant support of common cul-tural, scientific and educational projects, youth exchanges, cross-border projects and tourism promotion, and through individual mobility programs (scholarships, residencies) .

How did our project start? – From the beginning to the end

The forefather of our initiative was the iMCC project, which was founded in order to establish long-distance, precious relationships with inter-national organizations . The idea of MCC Summer Academy was born in the summer of 2011, when the core team started to take the first steps to realize their dreams . Then in September 2011, a couple of freshmen from the college joined the organizer group, and the hard work started . Even though we have met a myriad of difficulties we have remained enthusiastic and ambitious to reach our goal .

In December Csaba Hartmann, who was the founder and first project leader, had to leave the team because his studies called him abroad, and Ferenc Nyakas took his place .

Our work was accompanied with uncertainty and doubt all along, as the idea was a brand new initia-tive, and we had to make our own path and learn from our own mistakes .

Our financial issues straightened out when we won the grant of International Visegrad Fund, and from that point on the Summer Academy became a realistic goal .

We believe that our hard work had its result, and through that wonderful ten days we could realize the benefits of our work through the acknowl-edgement and honorable mentions from our participants .




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The Summer Academy started on 6th August, 2012, and lasted 10 days with the participation of 26 students from 9 different countries . Participants were given the opportunity to gain insight into the operation of the energy sector and to get to know the problems of sustainable development through professional lectures and seminars .

Lectures

• EU Energy Policy• Electricity Supply Networks• Climate policy• Nuclear and Wind Energy• Emission quota trading • Solar and Heat Energy• Gas Supply Networks

Practical professional programs

• Visiting Telenor House• Visiting BME nuclear reactor• UNHCR simulation• DIA Group Dynamics Trainings• KPMG case study solving• Thesis writing

Free time and social programs

• Visiting the Hungarian Parliament• Goulash party• International Night• Night Excursion• Cultural Trip in Budapest• Folk Dance Night

The program of MCC Summer Academy 2012



Lectures

During the MCC Energy Summer Academy 2012 we put a great emphasis on professional programs . As a part of that we invited numerous experts from different areas of science and business life who all give us a huge help to understand and get a deep insight into energetics and sustainability . The abstracts of their lectures can be found below .

We would like to express our sincere thanks to Mr . Gergely Pókos form McKinsey and Company and our alumnus Péter Horváth for holding practical and interesting lectures during the Summer Academy .

Péter Kaderják – Global trends in energy policy and market development

Péter Kaderják is the director of regional center for energy policy research (REKK) in Budapest . He was the president of the Hungarian Energy Office, and the chairman of the Energy Regulators Regional Association (ERRA) . He has been a member of the European Association of Environmental and research Economists . (EARE)

Mr . Kaderják held the first lecture at MCC Summer Academy, and he gave us a global overview of energy policy and sketched the main priorities the European Union from the point of view of energy market and decarbonization . He explained the major trends of energy markets, which are the following:

• The present economic crisis does not change mid-term energy demand trends

• Oil is not available cheaply any more

• A golden age of gas is to come (revolution in non-conventional drilling)

• Renewable energy becomes conventional with the EU and China leading

• Fukushima: uncertainties around the future of nuclear energy

• The 2°C climate change target is at serious risk (towards 3,5-6°C)

Professional programs

He also spoke about EU’s decreasing share in world primary energy demand but increasing hydro-car-bon import dependence, the 20-20-20 climate engagement by 2020, and the impact on EU com-petitiveness .


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Justyna Przychodzen

Justyna is the author of articles and research pa-pers on greening industry, connections between environment, quality and economic growth, as well as international environmental management . She has also worked as a consultant for several Polish and other European companies in the field of sustainable environmental strategy imple-mentation, socially responsible investments and environmental risk planning .

She gave us a full picture about sustainable en-ergy, and explained why it is important to know about it . We also had an insight into energy poli-cies and different methods of energy transition .

According to her, the keys to successful sustain-able energy policy are:

• quantifiable progress in structural and institu-tional changes connected with EU integration policy;

• broad inter-ministerial and inter-governmen-tal cooperation in the environmental policy domain;

• solid policy to promote renewable power generation,

• stable improvement in personal incomes in long term perspective .

Tibor Faragó – International Climate Policy Cooperation

Mr . Faragó is an expert in Climate Policy . He worked as the head of the environmental department in the former environmental ministry . He was a pro-fessional negotiator for Hungary in 1992 at the UN Rio Declaration on Environment and in 1997 at the Kyoto Climate Conference and in 2002 in Johannes-burg . He was the Hungarian chairman of Intergov-ernmental Panel on Climate Change (IPCC) .

He started his lecture with listing the precedents from which we should have learned, and he answered the question of whether global warm-ing was a natural and/or man-made process . We could hear about the key factors in the increase of man-made ghg emissions and scenarios of possi-ble ways of emission reduction . The conclusion of the lecture was that adaption is rational, but mit-igation is unavoidable, and in order to act, com-mon and differentiated responsibility is needed .




József Rónaky, Miklós Csúvár – Nuclear energy-safety

Both of the two experts work for the Hungarian Atomic Energy Authority, and they held parallel lectures about the topic in two groups .

József Rónaky sketched that our energy demand is growing continuously and if we want to reduce CO2 emission the role of nuclear energy will increase further . We learned that the operating reactors in Europe are safe but site and design specific upgrades are necessary . He spoke about the public acceptance of nuclear energy and the third generation reactors, which are even safer .

Miklós Csúvár explained the basics of nuclear energy to our students, and then we learned a lot about nuclear waste management, for which the proper technology is already available . We could also gain insight into the future of nuclear power plants, such as Generation 4, ITER and NIF .


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Erik Galambos – Solar Energy

From the lecture of Mr . Galambos we could get a clear, overall picture about the advantages and alternative uses of solar energy sources . We could find out that in the future the improvement of the efficiency of the Photovoltaic devices will lead to a breakthrough, solar energy has economical and environmental benefits, but state support is need-ed . We could get acquainted with an interesting creation, the solar heated swimming pool and he also explained the development of fuel cells .

József Fucskó – Emission Trading

Mr . Fucskó, who is a great expert in economics and mathematics, gained his degree in econom-ics at the University of Cambridge and also at the Central European University . He gave us an overall view about emission quota trading, and he had very practical examples to make himself under-stood . We could see through the Kyoto Protocol, and he declared that company level abatement does not depend on the applied allocation meth-od (grandfathering, auction, benchmark based), neither on the distribution of the cap, however, company profit and wealth do depend on these factors . He also revealed the dark side of emission trading, such as carbon leakage, and mentioned some scenarios about the future .

His final conclusions were:

• “Carbon constraint” – motivates for measures and innovation, but reduces possible ways of production and direction – thus a cost on

companies, consumers - the whole society – unless there is a huge luck with innovative results .

• Including carbon cost in economic decisions takes the mainstream to a low carbon (GHG) economy – the only economy consistent with long term life without excessive and irrevers-ible damage

• Distributive aspects, competitiveness fears to be handled

• ETS delivers, but only to the extent of reduc-tion target setting, courage to politicians

• ETS delivers at low cost (minimizes the total cost to society)

• Domestic action („supplementiarity”) vs . effi-ciency – higher costs and innovation incentive vs . low cost abatement elsewhere – needs further analysis

• Complex interactions – every economic activ-ity, every market influences ETS markets and vice versa




István Pócs – Geothermal Power generation opportunities in the CEE region

Mr . Pócs is a great expert in economics and he has more than 15 years of experience in project management and business development . He is also the CEO of CEGE since 2011 .

From his lecture we got an overview of Hungary’s geothermal potential from the point of view of power utilization, we got a brief introduction of combined heat and power generation techniques technically applicable in CEE region, and we acquainted with the work of MOL group .

Learning through practice

Apart from theoretical lectures, the organizers of the project offered training sessions and work-shops to the participants that developed their innovation, leadership, management and commu-nication skills .


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Visiting Telenor House

Besides the conventional lectures, we provided opportunity for our participants to visit the Tele-nor House in Törökbálint ,thanks to the support of Telenor Hungary, where they could experience first hand how a sustainable, environment-friendly building looks like .

The headquarters of Telenor Hungary, the Telenor House of Törökbálint, is one of Hungary’s most state-of-the-art and most environmentally friendly office buildings .

The heating and cooling system of the Telenor House is based on geothermal heat pumps and a heat probe drilled a hundred meters deep into the ground . The heat exchanger unit of the ven-tilation system reduces energy waste, while 168 square meters of solar cells generate more than

60% of the energy required to produce hot water for people working in the building . Various build-ing functions are controlled by a computer-aided intelligent central management system .

The Telenor House aims to promote work based on mobility and collaboration . Teleworking plays a key role in this concept . The vast majority of employees have a laptop with mobile Internet and secure internal network access .

In line with our environmentally conscious ap-proach, office work is supported by electronic document management . Employees digitize incoming documents and only print outgoing documents right before sending them .



UNHCR Simulation Game

As a refreshing program after the morning lec-tures, the participants of MCC Energy Summer Academy could try a simulation game of UNHCR, which was designed to create a better under-standing of the problems of refugees .

By playing the game the members of Summer Academy could:

• discover the concrete problems which con-cern refugees .

• think about possible solutions to refugee prob-lems, particularly with regards to integration .

• adopt a more welcoming attitude towards refugees in their own countries .

• become motivated to undertake actions for the benefit of refugees .

Case study solving

Members of the MCC Summer Academy 2012 had the opportunity to solve a case study of sustainable development and energy industry, which enabled them to get a more practical insight on these issues . We thank hereby the KPMG Hungary Ltd ., who wrote the case especially for the Summer Academy, for the generous support .


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In this part of our booklet you can read the best thesis of the MCC Summer Academy . Our partici-pants all did a great job to write a comprehensive and overall thesis on a given topic .

Is emission trading a proper instrumentfor climate policy?

Prepared by:

Irina Brehm

Kjetil Jørgen Alne

Krisztina Abraham

Krisztián Székely

Walter Mutter

Budapest, 15 .08 .2012

1. Emission Trading

Emission Trading is one of the three market-based mechanism under the Kyoto Protocol used by countries or companies to limit or reduce their greenhouse gas emissions (GHGs) in order to meet their emission targets . Emission Trading is also knows as the „carbon market” or refered as „cap and trade” . The other two mechanisms are Clean Development Mechanism (CDM) and Joint Implementation (JI) . Furthermore Emission Trading is a market-based scheme for environmental improval-concept, which allows parties to buy and sell permits for emissions or credits for reduced emissions of certain pollutants . (Environmental Business, 2012) . The parties mentioned before are countries with commitments under the Kyoto Protocol, known as Annex B Parties (including all Annex I countries with Belarus and Turkey) . They have accepted targets for limiting or reducing emissions . These targets are expressed as levels of allowed emissions, or „assigned amounts” which are measured in „assigned amount units” (AAU) (Kristina Mangino, 2012) . In the following all three mechanism are explained .

Thesis presentations



„Cap and trade” was launched in 2005 and is an EU ETS principle of combating the green house emissions . „Cap” means there is limit on the total amount of certain greenhouse gases that can be emitted by factories, power plants or other installations . Within this cap companies receive emission allowances which they can sell to other companies or buy from others when needed . (European Commission, 2010) . Thus, a new commodity was created in the form of emission reduc-tions or removals . Since carbon dioxide is the principal greenhouse gas, people speak simply of trading in carbon . Carbon is now tracked and traded like any other commodity . This is known as the “carbon market .” (United Nations Framework Convention on Climate Change, 2012) . As men-tioned there is another mechanism to reduce emissions, called „Joint implementation” . This allows countries with an emission reduction or limitation commitment under Kyoto Protocol (so called Annex I countries) to earn emission reduction units (ERUs) from an emission reduction or emission removal project, in another Annex B Party . Annex I countries include all industrialized countries that were members of the OECD in 1992, plus the countries with economies in transition (the EIT Parties), including the Russian Federation, the Baltic States, and several Central and Eastern Europe-an States . Joint Implementation offers the parties a flexible and cost-effecient means of fulfilling a part their Kyoto commitments, while the host Party benefits from foreign investment and technol-ogy transfer . (United Nations Framework Convention on Climate Change, 2012) . Furthermore this mechanism allows for joint mitigation projects between industrialised countries . Whereas Clean Development Mechanism (CDM), the third meachanim in emission trading, compensates emission reductions in developing countries . Such projects can earn saleable certified emission reduction (CER) credits . The mechanism is intended to meet two objectives: (1) to assist parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the convention; and (2) to assist parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments . (Verbruggen, 2000)

2. Instruments used to reduce CO2 Emissions

There are several instruments in order to reduce the carbon emissions . They can be divided into two groups as incentive based and direct regulatory . Incentive based instruments are emissions taxes, subsidies to emissions reductions, taxes on goods associated with pollution and tradable emissions allowances whereas the direct regulatory instruments, also called as command and con-trol instruments, are technology mandates and performance standards . (Goulder and Parry,2008)

Among the incentive based instruments cap-and-trade, also known as tradable emission allowances, and emission taxes are around which the most of the discussions are going on . As another alterna-tive, subsidies for the abatement of pollution might be implemented by the government that is to reward the companies that pollute less according to a baseline level . Although it seems like giving the same incentives to the companies to pollute less as the other methods, in practice it is less cost effective . This is basically because of the excess entry that is caused by the cost reduction for the companies . The last intensive based instrument is taxes on good associated with emission such as


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gasoline . However this doesn’t give the incentive to be more environmentally friendly . It only increas-es the price of the good, decreasing the demand at the same time since the alternative of the new expensive gasoline doesn’t necessarily have to be a low carbon product . (Goulder and Parry,2008)

One of the two direct regulatory tools is technology mandate which requires a certain technology used in several processes which helps to control the carbon emission . In practice, it cannot be eas-ily controlled since the application of the technology mandate differs from firm to firm despite the existence of a single regulation . There are also several cost inefficiencies . The other direct regulato-ry instrument is to set performance standards . It controls the output instead of the process which is the case ın the technology mandate . However despite providing flexible options for the type of energy used, it is still not cost effective since regulators don’t have sufficient information to set the optimum standards for each firm . All in all, cap-and-trade and emission tax are the most efficient ways to reduce the emission . (Goulder and Parry,2008)

3. Policy making

Some of the main challenges of the quota trading system are in the hands of the politicians . It is their job to first decide to implement the quota trading system, and then they must decide on the long term carbon emission cuts they want to implement . These decisions are very complicated, but I will show the main schools of international relations, and how they relates to international cooperation and energy and security questions, and with that in mind try to shed some light on whether or not the quota trading system is working, and how it can be improved to create a better climate policy, in order to answer the main question: Is Emission Trading a proper instrument for climate policy?

Realist

Realists consider states as primary actors (not international institutions), and for them, security, sovereignty and survival is the most important . This means that they will probably be skeptical of international cooperation . For a realist, self-help is the principal way to fulfill their national inter-est . When states cooperate, relative gains compared to the other states are the most important . Considering the abovementioned factor, a realist will only implement a climate policy as long as it is beneficial to their competitive national interest . Of the European countries, Poland might be a good example on a typical realist approach . Proposals to cut carbon emissions are largely looked upon as a threat to the economy (The economist, 2011) .

Constructivist

International relations are historically and socially contingent . This means that the politician’s de-cision making will largely depend on social structures . Often seen as more optimistic about inter-




national relations than a realist, however this varies and some constructivist have a more negative view on international relations in general (Jackson, 2004) .

Liberal

Liberalists usually endorse theories as the commercial peace theory, which says that international trade and globalization is good because it encourages cooperation rather than conflict through economic incentives . International institutions encourage cooperation which is for the common good . Strong belief in democracy, as democracies is more likely to adhere to international cooper-ation . The UK can be a good example here, with a strong belief in international trade and global-ization, and also a proponent of emission trading . (Wettestad, 2011)

In the above examples, I have mentioned two countries, Poland and the UK, and they are both a part of the EU ETS system . Both have implemented the quota trading system so the first part of decision making (whether or not to use emission trading) is done . However, the second part is that they must decide on how much they would like to cut in carbon emissions, which can be challenging .

Emission trading will have a larger effect if more nations take part in the trading system . This means that as long as less developed states takes a realist approach and look at the relative gains, they are not likely to implement this climate policy .

Emission trading largely depends on how much the politicians decide to cut in carbon emissions, and this is the main challenge for the European trading system . It is, however, unclear whether or not other climate policies will be more effective to implement . As an example, carbon taxes will


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not be very easy to implement either, considering the pressure it would put on carbon intensive industries and that taxes in general is quite unpopular, especially in difficult financial times .

In conclusion, it seems that emission trading from a political point of view is one of the most realis-tic climate policies because of a lack of better alternatives, rather than inherent qualities of the system itself .

4. Challenges in emissions monitoring

Emissions monitoring is an administrative function which is responsible for the compliance be-tween the allowances offered and emissions realized by the players of the market . It is also used for verifying the concentration of greenhouse gases in the atmosphere (Tietenberg, T ., et al .) .

Emissions can be monitored directly, using monitoring devices, or indirectly, using predictive methods (Tietenberg, T ., et al .) .

Gases like the CO2, which can be easily monitored by the audit of the amount of fuel con-sumed by the company or by the level of activity and the level of emission generating activ-ity . The problem is that there are some emissions that cannot be monitored (N2O, methane) because of the lack of technology or because of expenses . Here needs to be mentioned the trading and its contribution to difficulties in monitoring greenhouse gas emissions . This sys-tem, being a multi gas system, allows trading between different types of gases without an in-dex which would convert the offered allowances into common greenhouse units . Because of this, the trading loses its transparency, becomes hard to follow and leads to the maintenance or the increase of pollution (Tietenberg, T ., et al .) .

The transparency the market is dubious as well . One of the key players is the private sector where the companies, the actual polluters, have the most information about their behavior . Their reports about the emission do not always reflects the reality . Because the difficulties in the monitoring the trading of allowances, companies are able to sell allowances without reducing the emissions, and other companies from other countries are motivated to buy from this companies in order to be able to increase their emissions and keep business as usual or develop . Also the lack of transpar-ency causes that citizens are not aware of what is really going on at this large corporations, which encourages industry lobbying and leads to the ineffectiveness and unfairness of emission trading systems . (Baldwin, 2008; D’Oultremant, 2010)

Governments have the sufficient investigative and sanctioning power to check the veracity of the company reports, but here has to be mentioned the conflict in interests, because most of the polluters companies are important employers in respective regions . If a government sanctions a corporation because that exceeded the amount of greenhouse emissions it was allowed, the com-pany may decide to move into other, non-ETS country, where it can function without any limita-tions . The government of the respective state not only looses a huge tax payer, but also has to deal




with the support of people left without job . In addition to this, the respective company continues to pollute the air at the same level or more in the other non-ETS country .

All in all, it can be said, that emissions trading system has its deficiencies which need to be corrected .

5. Side effects of Emission Trading Systems

A potential difficulty with introducing emission trading systems is uncertainty . (Baldwin, 2008) Uncer-tainties can lead to various outcomes and side effects of emission trading, which neither companies, nor policy makers can forecast . These uncertainties constrain companies in implementing long term strategies to reduce carbon emission, thus adopting rather a “wait and see” strategy . (Baldwin, 2008)

Another effect that restrains incentives and innovations in order to reduce carbon emissions is the so called “grandfathering”, where polluting firms are given emission permits for free . This may create a rea-son for them not to cut their emissions . This is because firms making large cuts in their emissions would then potentially be granted fewer permits to pollute in the future . (IMF, 2008) Fortunately grandfather-ing rewards old technologies, avoids changes in production structures and unknown new technologies are excluded also because of size and scale which is bad for entrepreneurs and inventors . Therefore it is favorable to auction all permits rather then given permits for free like the European Commission pro-posed for full auctioning of EU-ETS permits for power companies from the start of 2013 . (IMF, 2008) On the other hand side, allocating permits by grandfathering can be used to protect domestic firms who have to compete with other firms that are not subject of the same regulation . (IMF, 2008)

This loss of price competitiveness due to emission permits can than lead to carbon leakage and migration of industry into other non-restricted countries . Nevertheless, there is no quantified data about these effects since there are also beneficial effects due to innovations to reduce carbon emissions . (Goldemberg, 1996) The choice of allowances allocation method may affect interna-tional migration of firms as well as the location of new firms . This is relevant in case of areas with a high density of industry, thus a lot of emissions in a regional area . Even though CO2 acts globally and therefore the location of originator of the emissions does not really matter from an environ-mental standpoint, policy frameworks should be different for other pollutants (e .g . NOx and SO2) . The same amount of a regional pollutant can exert a very high impact in some locations and a low impact in other locations, so it does actually matter where the pollutant is released . This is known as the Hot Spot problem . (Ramseur, 2010)

6. Achievements of emission trading (EU ETS)

Launched in 2005, the European Union Emission Trading Scheme is the first and largest cap-and-trade system of allowances for emitting greenhouse gases in the world, representing about 73% of the global turnover in carbon allowances and credits . EU ETS is currently in the second phase .


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Considering the lack of experience in emission trading before 2005 in the EU and the complexity of the scheme the achievements of the ETS are not negligible .

The emission trading system had a significant effect on corporate behavior . The companies in-volved in carbon emission are aware that ETS is here to stay, and they are aware that emitting carbon has a price, which has to be taken into consideration in the long-term strategies . The ETS also created opportunities for new businesses like carbon trading, carbon finance, carbon man-agement, carbon consulting or carbon auditing . (D’Oultremont,2010)

50% of the auction revenues of EU ETS in the Phase III (starting from 2013) should be used to fund greenhouse gas reductions, adaptation, research and development, renewable energy, energy effi-ciency and carbon capture and storage . (Hood, 2010)

Main CO2 emitting sectors are: combustion (covers 66% of the total emissions in europe), refining, iron & steel, cement & lime . The data from the EU ETS member countries show that in the last 5 years the CO2 emissions decreased with 15 .31%, but the allocated allowances were reduced by only 8 .75% . This policy of the EU ETS allowed huge profits from emission trading to companies in some of the industries, like ArcelorMittal in iron & steel, they had a surplus of 34 million EU allowances in 2011, worth about 230 million Euros . Cement & Lime sector is a good example for this . In this industry in 2007 the amount of allowances and the measured emission where almost equal, just above 200 million tons . At the end of 2011 companies managed to achieve an emission reduction of 33 .06% compared to 2007, but they actually received with 5 .95% more allowances . (Carbonmarketdata .com) The question is raised about the way the allowances are given to companies in each country and if we need a policy change for the Phase III starting 2013 for achieving the EU ETS ambitious plans to reduce CO2 emission by 30% by 2020 .

Emission trading has been criticized during the years, firstly because global warming will require a more significant change and implication from the EU and the countries, than the CO2 emission reductions achieved so far . On the other part the system is considered to be inefficient, because of the unjust financial advantages taken by the major polluters .

The amount of the allowances on the market is a very important factor in the market price . If the EU ETS distributes too many allowances to the countries, then the price of the emission can get dangerously low and probably companies will not invest anymore in reducing emissions, they will just buy the allowances, without improving their technologies . On the other part, if there are only a few allowances issued each year, the economies of the member countries will suffer, and proba-bly carbon leakages will occur .

In order to EU ETS to be efficient they have to find the best possibility for the allowances, so econ-omies will not have to suffer, and CO2 emissions are really reduced .




7. List of references

Baldwin, R ., (2008), Regulation Lite: The Rise of Emissions Trading, LSE Law, Society and Economy Working Papers, 3/2008

Carbon Market Data, 2011 . www .carbonmarketdata .com, last acces august 2012 .

D`Oultremont, C ., (2010) The EU’s emissions trading scheme: achievements, key lessons, and future prospects . Academia Press 2010, Belgium

Duerr, D ., 2012 . EU Emission Trading Fact Book, Facts and trends related to the European Emis-sion Trading Directive .

Goldemberg, J . et al . (1996) . J .P . Bruce et al . ed (PDF) . Introduction: scope of the assessment . Cli-mate Change 1995: Economic and Social Dimensions of Climate Change . Contribution of Working Group III to the Second Assessment Report of the Intergovernmental Panel on Climate Change . This version: Printed by Cambridge University Press, Cambridge, U .K ., and New York, N .Y ., U .S .A . . PDF version: IPCC website . doi:10 .2277/0521568544 . ISBN 978-0-521-56854-8 .

Goulder, Lawrence H . and Parry, Ian W .H . (April 2008) Instrument Choice in Environmental Policy Resources Fort he Future Discussion Papers 08-07

Jørgen Wettestad . «EU emission trading: Achievements and challenges» chapter four, in “Toward a common European Union energy policy” . 2011, pp . 87-106 .

Patrick Thaddeus Jackson, ed . “Bridging the Gap: Towards a Realist-Constructivist Dialogue” in Inter-national Studies Review vol . 6, 2004, pp . 337-352

Ramseur, Jonathan L . (April 16, 2010), Estimating Offset Supply in a Cap-and-Trade Program, Con-gressional Research Service, p . 1, retrieved February 15, 2011 .

The Economist, 18 .5 .2011 . “Green growls in Poland, Poland’s environmental politics” . Last acces 13 .8 .2012 . http://www .economist .com/blogs/easternapproaches/2011/05/polands_environmental_politics

Tietenberg, T ., Grubb, M ., Michaelova, A ., Swift, B ., Zhang, Z ., International Rules for Greenhouse Gas Emission Trading, United Nations Conference on Trade and Development

Mangino, Kristina, 2012 . Emissions Trading under the Kyoto Protocol, http://www .eoearth .org/article/Emis-sions_Trading_under_the_Kyoto_Protocol, last access August 14th 2012 .

United Nations Framework Convention on Climate Change, 2012 . http://unfccc .int/kyoto_protocol/mecha-nisms/emissions_trading/items/2731 .php, last access August 14th 2012 .

Heyhoe, Edwina et . al, 1998 . Emissions trading and the Kyoto Protocol .

Environmental Business, 2012 .http://www .environbusiness .com/CChange/ETM .html, last access August 14th 2012 .

International Energy Agency, 2012 . http://www .iea .org/subjectqueries/keyresult .asp?KEYWORD_ID=4124, last access August 14th 2012 .


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Besides the hard professional work, the members of the project had a chance to discover our capital and get ac-quainted with Hungarian culture and traditions. We would like to express our sincere thanks to Miklós Teszáry for his support, mainly for organizing an unforgettable dance night with the help of Bartók Dance Group.

Cultural trip to Budapest

As we have participants from all over Europe, and for most of them it was the first time in our capital, it was a must to have a cultural sight-seeing tour .

We arranged to visit the Hungarian Parliament with a professional guide, then we offered our guests to visit Deák square, Váci Street, and later on we had the opportunity to see Budapest at night from the Castle and from the Citadel .

After the hard work everybody was amused by the wonderful view, a lot of beautiful pictures were taken and everybody had a great, memorable time .

Social programs and free time activities



Night Excursion

‘Explore the city!’ is a brand new kind of team building program, which was invented by the members of the high school program of our College . Our mission had been to advertise and introduce Budapest, one of the most exciting capital cities in Central Europe . In the first part of 2012, we had an idea to organize something new to introduce the cool side of our loveable city, Budapest . And indeed, that was the point when ‘Explore the city!’ was born .

The program included a lot of funny exercises where the members could not only get to know the city, but also each other .

It was quite a funny evening, everybody had a really good time and we hope that every participant had fallen in love with our beautiful capital!


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Gala Dinner

As an ending of our ten-day-long hard and profes-sional work, on August 16 our guests were given the honor to take part in the MCC Energy Summer Academy Gala Dinner .

We arrived to the moment of handing out the diplomas and expressing our thanks for everyone’s persistence, enthusiasm and hard work during the program . It was a night of incredible stories, new friendships, laughs, delicious food as well asHun-garian wine and champagne .



“Dear Organizers of the Summer Academy,I really appreciated your efforts and work for Summer Academy. I think You all did a great job! It was a professional and also funny time with you guys. Keep up being so abitious!Thanks a lot!Peik”

„So guys,

HERE is the end of the beginning of a nice friendship.

You did not nice, you did very well, you treated u sas

your friends. I feel now not leaving a summer acade-

my, I feel like leaving unforgettable moments.

You know guys, more coffee for the next time!

It was a pleasure, best wishes for the future!

Let’s eat the future, let’s change the world!

From Spain,

Antonio Relaňo Pastor”

Opinions from our participants


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„ Dear girls and guys,I would like to tell you a very special thank you for the wonderful time I had with all of you at MCC Summer Academy. Although I arrived 2 days later you were friendly, supportive and just love-ly towards me, and I felt welcome and integrated from the very start. I learned a lot about top-ics I would otherwise never have gotten in touch with and for that I thank you too. You deserve appreciacion for your great work and enthusiasm! Although the program was sometimes too full and I was having some issues with the waking up… ☺ I enjoyed the intense time, and it became a precious experience in my life.All the best for all of you! <3Anastasia”

“Dear Organisers, Dear MCC Summer Academy Team-

Dear Friends!Thank you so much for the great time I could experi-

ence with you here in Hungary!

These two weeks were some of the greatest in my life

and I enjoyed every minute of it (even those being tired,

frustrated with thesis wrting…☺)

I’m glad I had opportunity to experience such great

lectures, sightseeing and of course parties and over-

all to get to know such great persons as you and also

other participants!I hope I can see you all sometime soon- But I am

pretty sure of it, because I really fell in love with Bu-

dapest. <3And of course all of you are most warmly welcome to

visit me in Freiburg!I wish you all the best for the future, a good health,

much fun, love and of course ENERGY!!

Ich werde euch vermissenSophie”



„Dear Friends,Those eleven days shared with you were just amazing. With you and thanks to you I have learned a lot of things and I have spent great time. I’m thinking that tomorrow I’m going to start missing all of you guys. Buta t least I know that we can keep in touch ☺. You are al-ways welcome to Spain.Hugs ang kisses and thanks!! ☺(Abrazas y besos y gracias ☺)Quique”

“Another turning point, a fork stuck in the road

Time grabs you by the wrist, directs you where to go

So make the best of this test, and don’t ask why

It’s not a question, but a lesson learned in time

It’s something unpredictable, but in the end it’s right.

I hope you had the time of your life.

So take the photographs, and still frames in your mind

Hang it on a shelf in good health and good time

Tattoos of memories and dead skin on trial

For what it’s worth it was worth all the while

It’s something unpredictable, but in the end it’s right.

I hope you had the time of your life.

… Natascha + Irina= the RUSSIANS ☺


Event Book of MCC Summer Academy 2012

With the support of:Mathias Corvinus CollegiumInternational Visegrad Fund

MCC Summer Academy Project Team

Budapest, 2012


http://www.mcc.hu/


http://www.mcc.hu/

event book

Documents

summer academy of mcc

program of mcc summer

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energy policy

project system

project start

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erik galambos solar